AMD put a number on its AI ambition on Tuesday, telling Wall Street at Citi's Global TMT Conference that its data center business should roughly double in 2027 to about $70 billion, with Instinct AI GPUs contributing the low $40 billions and server CPUs most of the rest. The stock jumped about 6% to just above $500, lifting AMD's market value past $820 billion.
Read the number for what it is: a forecast, not booked business — but a forecast with a paper trail. Data center was roughly $16 billion of revenue in 2025 and is tracking toward about double that this year; the 2027 target doubles it again. That would be an Instinct GPU business in the low $40 billions ramping on the MI450, several times today's level.
The part of this story you should linger on is how AMDAMD-- intends to get there, because its three anchor AI customers didn't come cheap and the cost is hidden inside the deals rather than in the revenue line. Meta agreed to a five-year deal for up to six gigawatts of Instinct GPUs, tied to performance-based warrants that could hand Meta up to roughly 10% of AMD's outstanding shares. OpenAI committed to up to six gigawatts, its first gigawatt of MI450 landing this half, in a deal that included revenue warrants. Anthropic signed up for up to two gigawatts — and AMD agreed to invest up to $5 billion in the customer buying its chips.
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When a chipmaker pays the customer to buy the chips, the headline revenue is subsidized.
Then there is the margin number, which management was candid about in the same session even as it raised its long-term market view to a $2 trillion AI opportunity by 2030. Gross margin is expected to edge lower in the fourth quarter and through 2027 as the MI450 ramps. CFO Jean Hu described the priority as gross profit dollars, not the gross margin percentage.
That sentence is doing more work than it looks. A company that frames "dollars, not percentage" as it ramps a flagship GPU is telling you it is cutting price — or absorbing setup cost — to turn ambition into shipments. When a challenger's margin falls as unit volume climbs, the share gain is bought, not earned. AMD has argued for years that it wins where Nvidia leaves doors open; the margin guidance is the price of the door swinging.
The number that should matter most to a shareholder isn't the $70 billion. It's what the market is already charging for it. AMD is up roughly 136% year to date and more than 200% over the past year. At about $505 it trades near $825 billion in market value — around 128 times trailing earnings and 20 times sales. Nvidia, the market leader that earns roughly thirty times more money, trades near 28 times earnings. The smaller, far less profitable competitor is priced at more than four times Nvidia's earnings multiple.
The market isn't paying for today's AMD. It's paying for the $70 billion ambition before it is earned.
That is not automatically a mistake — roughly $29–30 billion in purchase commitments and the named hyperscalers are real. But they are real at a price. The shareholder value in the story is diluted three ways: margins heading down, equity warrants handed to customers, and a multiple that has already collected for much of the success. The honest arbiter of whether the ambition is worth what the market charges isn't the revenue line that made the headline — it's gross margin. If margin holds while revenue doubles, the target is real earnings growth. If revenue doubles while margin keeps sliding, investors will have paid for a headline AMD is buying, one discounted dollar at a time.
